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TMI Blog2015 (8) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2, other grounds are argumentative and supportive to the main ground No. 2 which reads as under : "2. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in allowing the deduction of interest of Rs. 1,36,17,335 as revenue expenditure even though the same was never claimed by the assessee in the return of income." 2. Brief facts giving rise to this appeal are that the assessee-company was engaged in the business of manufacturing of precision instruments mainly for the Ministry of Defence, Government of India, British Aerospace, U.K. and for GE med. The assessee filed a return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this issue. Now, the aggrieved Revenue is before this Tribunal with the main ground as reproduced hereinabove. 4. We have heard arguments of both sides and carefully perused the relevant material placed on record before us. The learned Departmental representative submitted that in view of decision of the hon'ble Supreme Court in the case of Goetze (India) Ltd. v. CIT [2006] 284 ITR 323 (SC), the Assessing Officer is not empowered to entertain any claim of the assessee which could not be placed in the return of income or by way of a revised return. The learned Departmental representative further submitted that the Commissioner of Income-tax (Appeals) erred in allowing the deduction of interest as revenue expenditure even though the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akin to the payment of the same on loans taken for the acquisition of fixed assets like vehicle, machinery, etc., and, therefore, interest paid on loans taken for fixed asset is allowable as revenue expenditure. 6. On a careful consideration of the above rival submissions, at the outset, we note that the Commissioner of Income-tax (Appeals) allowed the appeal of the assessee on this issue with following observations, findings and conclusion : "4.10 I have considered the findings recorded by the learned Assessing Officer as per the assessment order, the submissions made by the learned authorised representative and the facts of the case on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant from where the business is being run for the last over 30 years. 4.11 The capitalisation of the conversion charges was made as the land is capable of being used for commercial and other purposes. But as the asset is already in existence and the business is running from the same very factory, the interest paid cannot be capitalised. Instead it is a revenue expense and hence the sum of Rs. 1,36,17,335 is allowed to be deducted from the total income. The payment of interest on the instalments of principal amount in this case is akin to the payment of the same on loans taken for acquisition of fixed assets like vehicles, machinery, etc. When the interest paid on loans taken for fixed assets, is allowed as revenue expenditure, I see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia) Ltd. v. CIT [2006] 284 ITR 323 (SC), the Assessing Officer is not empowered to entertain any claim out of return of income which could not find place in the original return of income or otherwise than by revised return but in the same decision, the hon'ble apex court made it clear that this did not impinge on the power of the Tribunal. However, we are of the considered opinion that since the asset, i.e., factory premises was already in use of the assessee, therefore, the interest paid along with instalment towards conversion of charges of land cannot be treated as capital expenditure and the same cannot be held to be capital expenditure. Thus, we are of the opinion that the Commissioner of Income-tax (Appeals) was right in holding t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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